Short Arm

September 8, 1985|By Jack Snyder

Carteret Savings and Loan Association's mortgage banking unit is introducing an adjustable rate mortgage with a shortened term to reduce interest costs. The ARM, featuring capped annual interest rate and payment adjustments over a 15-year amortization schedule, will be available through Carteret offices in New Jersey and Florida. The interest rate will be adjustable each year to reflect the U.S. Treasury bill index plus 2.75 percent. The loan has a two percentage point cap on rate changes in any one year. The loan has a lifetime cap of 5.75 percent, meaning the interest rate could never increase more than the original rate plus that amount. Robert C. Walsh, president of Carteret S&L's mortgage banking unit, said reducing the loan term from 30 to 15 years eliminates about 60 percent of the borrower's interest cost on a mortgage that runs to maturity. ''The home buyer also builds up equity faster, since the loan is paid off in less time,'' he added.